S&P Global Ratings has reaffirmed Nigeria’s sovereign credit rating at B- and kept a positive outlook on the country’s economy. This decision shows cautious confidence in Nigeria’s ability to manage economic difficulties and maintain reform momentum.
The B- rating places Nigeria at a speculative grade, meaning the country is seen as higher risk compared with investment-grade sovereigns. It signals that Nigeria’s capacity to meet financial commitments remains constrained by structural and institutional weaknesses.
In its latest report, S&P listed multiple assessments of the country’s fundamentals. These scores reflect strengths in economic performance and budget management while indicating weaknesses in institutional capacity and debt management.
The ratings reaffirmation comes after more than a year of policy shifts and economic reforms in Nigeria. This includes fiscal discipline measures, adjustments to monetary policy, and efforts to stabilize foreign exchange markets. S&P’s positive outlook stems from improvements in external balances, stronger policy frameworks, and ongoing fiscal efforts.
S&P noted that “the positive outlook reflects improving external, economic, fiscal, and monetary results.” This phrasing recognises that progress has been made in key macroeconomic indicators. However, the agency also emphasised that these improvements are not yet sufficient to justify an immediate upgrade to a higher rating grade.
The report further stated “we could raise our ratings over the next 12 months if Nigeria’s economic performance continues to exceed our forecasts, alongside more entrenched fiscal and external gains.” This reflects S&P’s conditional view: a true credit upgrade requires sustained economic improvement beyond current trends.
Conversely, S&P warned that an upgrade is not guaranteed. It clarified “we could revise the outlook to stable if risks to Nigeria’s reform program implementation arise or if capacity to repay commercial obligations weakens.” These risks include fiscal pressures, limited domestic financial market capacity, and potential capital outflows if confidence weakens.
S&P also highlighted specific downside scenarios. It explained that a weakening of fiscal balances or commercial repayment capacity could prompt a shift back to a stable outlook. This would indicate reduced confidence in Nigeria’s ability to sustain reforms or handle economic shocks.
Nigeria’s foreign exchange position and debt management remain central to the rating. Higher external balances and a disciplined fiscal framework have helped contain borrowing costs and buttress investor confidence. Nonetheless, Nigeria’s low gross domestic product per capita and narrow revenue base continue to weigh on creditworthiness assessments.
S&P’s decision follows an earlier move in late 2025 when it revised Nigeria’s sovereign outlook to positive from stable. That earlier change reflected similar themes: macroeconomic improvements, stronger external buffers, and reform actions aimed at growth and stability.
Despite the positive outlook, Nigeria’s sovereign rating remains at B-, which is several notches below investment grade. This rating level signals elevated risk for lenders and investors. Nigeria’s economic fundamentals, including inflation, fiscal constraints, and external vulnerabilities, have improved but still lag behind higher-rated peers.
For policymakers, maintaining the positive outlook requires deepening reforms. Strengthening revenue collection, expanding non-oil sectors, and improving institutional transparency will be necessary to enhance credit fundamentals. Without progress in these areas, the country risks falling back to a stable or even negative stance in future ratings.
S&P’s assessment also underscores the importance of data quality and economic governance. Reliable macroeconomic data and the ability to manage public finances with precision are critical for credit stability. Weak statistical systems or opaque fiscal practices can erode investor trust and weaken sovereign ratings.
In summary, S&P’s reaffirmation of Nigeria’s B- credit rating with a positive outlook signals restrained confidence. The country’s reform agenda and economic adjustments have generated measurable improvements. Still, structural constraints and persistent risks prevent an immediate upgrade. Nigeria’s next rating move will depend on its ability to translate policy reforms into sustained macroeconomic gains.
